Medical services
In Art. 149 of the Tax Code lists all goods and services that are not subject to value added tax. These include medical services and several other types of services that can be found in clinics:
- care for children and the sick;
- sale of a number of medical products.
A prerequisite for VAT exemption is that the clinic must have a license to provide these services.
There is another document that declares exemption from VAT for medical services in 2021 - this is the Decree of the Government of the Russian Federation No. 132 of February 20, 2001. The resolution provides a list of services in day and 24-hour hospitals, services of clinics and sanatoriums, services for conducting medical examinations and sanitary and hygienic measures.
Another document that explains the VAT exemption is the letter of the Department of Tax and Customs Policy of the Ministry of Finance of the Russian Federation No. 03-07-07/97292 dated December 12, 2019.
The concept of medical services is in Federal Law-323 “On the Protection of Citizens’ Health”. This document states that a medical service is a complex of medical interventions, including diagnosis, prevention, treatment of diseases and medical rehabilitation.
The law classifies medical services not subject to VAT as:
- services from the list that are provided under compulsory medical insurance;
- services for diagnosis, prevention and treatment from the list approved by Decree of the Government of the Russian Federation of February 20, 2001 No. 132;
- blood collection services;
- emergency medical services;
- services for medical staff on duty next to seriously ill patients;
- pathological and anatomical.
Cosmetic, veterinary and sanitary-epidemiological services are subject to VAT (except for those veterinary and sanitary-epidemiological services that are financed from the budget).
The Tax Code of the Russian Federation does not provide regulations regarding the form of payment for medical services, so services are not subject to VAT, regardless of cash or non-cash form of payment. The benefit also applies when providing services to citizens who are paid for by a legal entity - for example, their employers (letter of the Federal Tax Service of Russia dated March 27, 2013 No. ED-18-3 / [email protected] ) or insurance companies (letter of the Ministry of Finance of Russia dated June 17, 2015 No. 03-07-07/35004, dated 02/26/2013 No. 03-07-07/5466).
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Not subject to VAT
First of all, the most important and vital medical products are not subject to VAT. They are listed in the Decree of the Government of the Russian Federation dated September 30, 2015 No. 1042, which is based on paragraph 2 of Article 150 of the Tax Code of the Russian Federation, paragraph 1 of paragraph 2 of Article 49 of the Tax Code of the Russian Federation. This is a closed list; it can only be changed or supplemented by the officials themselves, which they do if necessary. For example, the list of medical goods in Government Decree No. 1042 was updated four times in 2021.
Here are the types of goods that medical institutions can purchase and sell and which are not subject to VAT:
- medical equipment and medical products according to special lists introduced by the Government of the Russian Federation (subclause 1, clause 2, article 149 of the Tax Code of the Russian Federation);
- equipment for the rehabilitation of disabled people or the prevention of disability - the list is in the Decree of the Government of the Russian Federation dated September 30, 2015 No. 1042;
- food products that are produced in the canteens of medical institutions and are sold in such institutions, as well as food products that are produced in catering establishments and are sold to canteens in medical institutions (subclause 5, paragraph 2, article 149 of the Tax Code of the Russian Federation and letter of the Federal Tax Service of Russia dated October 19, 2011 No. ED-4-3/ [email protected] ).
VAT is not assessed on medical goods produced in Russia or other countries, sold in Russia or imported.
What goods are not subject to VAT enshrined in the Tax Code?
The list of goods subject to 18% VAT does not include medical equipment. What articles of the law can be used as a guide?
Ivashin I.M.
Answer:
In accordance with paragraph 1 of paragraph 1 of Article 146 of the Tax Code of the Russian Federation, the sale of goods (work, services) in the territory of the Russian Federation is recognized as an object of VAT taxation, with the exception of transactions that are not subject to taxation in accordance with Art. 149 of the Tax Code of the Russian Federation.
Thus, on the basis of paragraph 1, paragraph 2, Article 149 of the Tax Code of the Russian Federation, the sale (as well as the transfer, implementation, provision for one’s own needs) on the territory of the Russian Federation of the following medical goods of domestic and foreign production according to the list is not subject to taxation (exempt from taxation): , approved by the Government of the Russian Federation:
- essential and vital medical equipment;
- prosthetic and orthopedic products, raw materials and materials for their production and semi-finished products for them;
- technical means, including motor vehicles, materials that can be used exclusively for the prevention of disability or rehabilitation of disabled people;
- glasses (except for sunglasses), lenses and frames for glasses (except for sunglasses).
Part of the medical equipment being sold is included in the “List of the most important and vital medical equipment, the sale of which on the territory of the Russian Federation is not subject to added property tax” approved by Decree of the Government of the Russian Federation of January 17, 2002 No. 19, while the sale of such medical equipment on the territory of the Russian Federation is exempt from taxation , in accordance with paragraph 1, paragraph 2, article 149 of the Tax Code of the Russian Federation.
The basis for exemption from VAT on the sale of medical equipment or for the application of a preferential VAT rate on the sale of medical equipment and medical products is the OKP code of the product according to the All-Russian Product Classifier OK 005-93.
In fact, the only document confirming the OKP code when selling products is a certificate of conformity.
Products listed under the code 940000 “Medical equipment” of the All-Russian Product Classifier OK 005-93 and not included in the List of Approvals. By Decree of the Government of the Russian Federation of January 17, 2002 No. 19, they are subject to taxation at a rate of 18%, regardless of the presence of registration certificates of the Ministry of Health of Russia as medical products.
According to the above rules, despite the fact that you are a payer of value added tax, if your type of medical equipment to be sold falls into the approved “List of the most important and vital medical equipment, the sale of which on the territory of the Russian Federation is not subject to value added tax » this type of medical equipment is exempt from VAT taxation, in accordance with paragraph 1, paragraph 2, article 149 of the Tax Code of the Russian Federation.
When conducting VAT-free transactions, the invoice must be issued without allocating VAT, in accordance with clause 5 of Article 168 of the Tax Code of the Russian Federation. However, if you nevertheless presented VAT to the buyer, then it must be paid to the budget, in accordance with clause 5 of Article 173 of the Tax Code of the Russian Federation. But the use of input VAT deduction in such a situation will definitely lead to problems with the tax authorities for the buyer.
According to the regulatory authorities, VAT paid by the buyer on non-taxable transactions is not subject to deduction, this is indicated in the letters of the Ministry of Finance of Russia dated 10.10.2008 N 03-07-07/104, the Federal Tax Service of Russia dated 15.07.2009 N 3-1-10/ [email protected]
In the event that during the sale of medical equipment subject to approval. The list, you still allocated the amount of VAT, billed it to the buyer, and paid this tax to the budget, the tax authorities in this case will not apply penalties to you, but the buyer will not be able to reimburse the amount of VAT indicated in the documents. And your counterparty may have problems with regulatory authorities.
Subject to VAT at the rate of 10%
When importing or selling medical goods, a preferential rate of 10% applies (clause 4, clause 2 and clause 5, article 164 of the Tax Code of the Russian Federation). Codes of medical products that can be imported and sold at a preferential rate of 10% are listed in Decree of the Government of the Russian Federation dated September 15, 2008 N 688 (as amended on March 20, 2018). Officials also adjust Resolution No. 688 almost every year.
Here are the types of goods taxed at a 10% rate:
- medicines for treatment and clinical research, including pharmaceutical substances, medicinal products manufactured by pharmacies;
- medical products except for the most important and vital medical products from List No. 1042.
VAT rate for medical products
Article 164 of the Tax Code provides for several options for value added tax rates - 0%, 10%, 20% and a calculated rate. Since medical products are socially significant goods, a number of benefits have been established for their import and sale in accordance with the lists approved by the Government of the Russian Federation.
The Federal Tax Service of Russia, in a letter dated April 23, 2020 No. SD-4-3/ [email protected] , reported what VAT rate is used on the sale of medical products intended to combat COVID-19.
Who has 10% VAT
A rate of 10% is imposed on the sale of medical goods of both domestic and foreign origin. Such products include:
- medicinal products, including pharmaceutical substances, medicinal products intended for clinical trials of medicinal products, and medicinal products manufactured by pharmacies;
- medical products, with the exception of the most important and vital medical products, operations for the sale of which are exempt from taxation upon submission of a registration certificate for the medical product to the tax office.
Types of medical goods can be determined in accordance with the All-Russian Classifier of Products and the Unified Commodity Nomenclature for Foreign Economic Activity of the EAEU.
Lists of codes for the types of specified medical products were approved by Decree of the Government of Russia dated September 15, 2008 No. 688.
Availability of a registration certificate
By virtue of paragraph 4 of Art. 164 of the Tax Code of the Russian Federation, when selling medical devices according to the list, a 10 percent rate is used with the condition that a registration certificate is provided to the inspection.
Thus, the codes given in the specified lists must be applied to medical goods of Russian and foreign origin, which are registered in the prescribed manner and for which there are registration certificates.
Therefore, for medical products for which there are no registration certificates, including due to the expiration of the registration certificate and the incompleteness of the re-registration procedure, the VAT rate of 10% is not applied.
Coronavirus relaxations
According to paragraph 10 of the Decree of the Government of the Russian Federation dated April 3, 2020 No. 430 “On the peculiarities of the circulation of medical devices, including state registration of a series (batch) of a medical device,” the sale of disposable medical devices not registered in the Russian Federation is permitted according to the list provided in the appendix to this document , without obtaining permission, if these products are registered in accordance with the established procedure in the manufacturing country.
What does it mean?
This means that it is possible to sell disposable special-purpose medical products that are not registered in Russia according to the approved list. Obtaining permission from Roszdravnadzor is not required if the products have been registered in the manufacturing country. This rule will be in effect until 2021.
Thus, in relation to anti-coronavirus medical products from the government list, a 10 percent rate can be applied if they are not registered in the Russian Federation and are named in the list of medical products for which a 10 percent rate is applied according to Resolution No. 688.
There is a simplified procedure for registering medical devices
Please note that for the period until the end of 2021, a simplified procedure for registering series (batches) of medical products has been established.
The rules for state registration of medical devices were approved by Decree of the Government of the Russian Federation of December 27, 2012 No. 1416. By Decree of the Government of the Russian Federation of March 18, 2020 No. 299, amendments were made to these rules.
A simplified procedure for registering medical devices necessary to prevent the spread of infectious diseases, including coronavirus, has been established. These are, in particular, the following products:
- insulating protective suits;
- examination and procedural latex gloves;
- disposable and reusable operating gowns;
- disposable and reusable isolation gowns;
- reusable face masks to provide respiratory protection;
- powdered and powder-free examination and procedure seals made of polychloroprene;
- non-sterile shoe covers that do not conduct electricity;
- patient gowns designed for disposable and reusable use.
In total, 36 categories of the most important medical products at the moment fall under the new rules. State registration of a medical device included in the list is carried out once in relation to one name of a medical device from one manufacturer (manufacturer).
The simplified rules also apply to the formation of a package of documents submitted to the responsible government agency for registration.
What is important here is that the registration certificate is issued before evidence of quality, effectiveness and safety is provided to Roszdravnadzor.
Supporting documents must be submitted within a period not exceeding 150 working days from the date of its state registration. Based on the results of the examination, Roszdravnadzor makes a decision on confirming the state registration of the product or canceling it.
As officials note, this will allow medical devices needed to prevent the spread of infectious diseases to be put into circulation in a short time.
Which medical products are exempt from VAT during a pandemic?
When importing medical products into the Russian Federation, as a general rule, taxation is carried out at a rate of 10% (clause 4, clause 2 and clause 5, article 164 of the Tax Code of the Russian Federation). The exception is the import of essential and vital medical products - the sale of such products is exempt from VAT.
Essential medical products imported and sold in Russia are exempt from VAT if the intended purpose of the product is confirmed and the goods declaration is registered before September 30, 2021 inclusive.
Thus, the list of medical goods, the sale of which on the territory of the Russian Federation and the import of which into the territory of the Russian Federation is exempt from VAT, has been expanded. The list approved by Decree of the Government of the Russian Federation dated September 30, 2015 No. 1042, was supplemented by Section V “Essential medical products imported into the territory of the Russian Federation.” It includes:
- medical masks;
- drugs for use in the treatment of coronavirus;
- tests to detect COVID-19;
- artificial lung ventilation devices and a number of other products.
The corresponding Decree of the Government of the Russian Federation dated April 2, 2020 No. 419 came into force on April 6, 2021 and applies to legal relations that arose from March 16, 2021.
Documentation confirming the purpose of importing goods is prepared by authorized regional authorities. The papers must indicate the free transfer of products to medical institutions. The same documents are required for exemptions on import customs duties.
Conditions for applying preferential rates
Registration certificate. To apply a 0% or 10% preferential rate, the taxpayer must have a registration certificate for medical products or equipment. If there is no registration certificate with the code or it is expired, the right to a preferential rate is lost, and VAT will have to be paid at a rate of 20% (letters of the Ministry of Finance of Russia dated September 13, 2018 No. 03-09-19/65511, dated January 24, 2018 No. 03-07- 07/3560).
Compliance with codes. The registration certificate of a medical product must contain a code. Goods produced in Russia have a code from the All-Russian Classification of Products (OKPD 2), and imported goods have a code from the Commodity Nomenclature of Foreign Economic Activity of the Eurasian Economic Union (TN VED EAEU).
To be exempt from VAT, the code according to the Commodity Code for Foreign Economic Activity of the EAEU or OKPD 2 in the registration certificate of a medical product must match the code from the list in Government Decree No. 1042 or in Decree No. 688. If the company cannot provide such a registration certificate, it will have to pay VAT at a rate of 20%.
Be careful, ask suppliers for registration certificates for medical products in order to apply preferential rates, and monitor the statute of limitations on these certificates. Carefully check the code in the registration certificate and the code in List No. 1042 or List No. 688. During audits, the tax office requests registration certificates and checks codes to ensure your right to a preferential rate. If the codes do not match or the certificate has expired, you will be charged additional VAT and may be fined.
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Conditions for preferential VAT for medicines
According to paragraphs. 4 paragraphs 2 art. 164 of the Tax Code of the Russian Federation, the list of medical goods, the sale of which is subject to VAT at a ten percent rate, includes:
- medicines (including pharmaceutical substances, means for conducting clinical trials of medicines, as well as medicines manufactured by pharmacies);
- medical products, except for the most important and vital ones, the sale of which is exempt from taxation.
When selling medicines, pharmacy organizations have the right to apply a ten percent VAT tax rate in the case when the medicines have a valid registration certificate issued in the prescribed manner (Letter of the Federal Tax Service of Russia dated August 10, 2011 N AS-4-3 / [email protected] “On the list of documents confirming the manufacture of medicines by pharmacy organizations, and the application of the tax rate of value added tax in the amount of 10% when selling them on the territory of the Russian Federation”).
In the case of the sale of medicines manufactured internally in pharmacies, VAT at a rate of 10% is applied if the medicines have a prescription or are requested by a medical institution.
If there is no registration certificate for a medicine or the registration certificate has expired, a VAT rate of 18% is applied (letters of the Ministry of Finance of the Russian Federation dated September 13, 2018 No. 03-09-19/65511, dated January 24, 2018 No. 03-07-07/3560 and dated February 18, 2021 No. 03-07-07/9851).
In addition, it is necessary that medical goods comply with codes from special lists approved by Decree of the Government of the Russian Federation of September 15, 2008 No. 688 “On approval of lists of codes of medical goods subject to value added tax at a tax rate of 10 percent.” These lists are compiled in accordance with the All-Russian Classification of Products (OKPD 2), as well as the Commodity Nomenclature of Foreign Economic Activity of the Eurasian Economic Union (TN VED EAEU).
If the product corresponds to a code from the special lists, no additional conditions can limit the possibility of applying a preferential VAT rate. An example is the clarification in paragraph 20 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33: “the application of a tax rate of 10 percent in relation to a specific type of product cannot be made dependent on whether the sale of this product took place on the territory of the Russian Federation or the goods were imported into the territory of the Russian Federation.”
